Abstract: This paper identifies the dynamic evolution mechanism of PPI and CPI dependence by constructing rolling window dynamic correlation coefficient. Based on this, the rolling window Granger causality test method is used to analyze the short-term transmission mechanism of PPI and CPI. It is found that China's PPI and CPI are experiencing a transition from a reverse-pushing single-drive phase to a forward-conducting and a reverse-reciprocal dual-drive phase,which means that the current stage of governance of inflation requires a combination of monetary policy demand management methods and supply side price control methods.

Key words: Consumer price index; producer price index; Granger causality; dynamic correlation coefficient